Fruit Segment Drives AGRANA Growth
Net financial expense was influenced by higher interest expense related to acquisitions in the Fruit Segment as well as a decrease in income from associates following the changeover of Atys and the devaluation of several East European currencies.
11/01/07 The AGRANA Group continued its growth course during the first nine months of 2006|07. AGRANA – the sugar, starch and fruit company – recorded an increase of 23% in revenues over the comparable prior year figure of € 1,121.5 million to € 1,380.4 million. Income from operations rose from € 83.5 million in the first three quarters of the previous year to € 89.7 million for the reporting period, or by 7%.
“This solid development was supported primarily by the Fruit Segment as well as higher revenues in the Sugar and Starch Segments. Strong organic growth and the initial full consolidation of the former Atys Group led to an increase of € 209.2 million in the Fruit Segment’s revenues to € 583.6 million“, commented AGRANA CEO Johann Marihart. “The 7% improvement in income from operations was a real achievement, given the additional levies from the new EU sugar CMO and higher prices for energy and raw materials.“
Net financial expense for the first nine months of 2006|07 was influenced by higher interest expense related to acquisitions in the Fruit Segment as well as a decrease in income from associates following the changeover of Atys to full consolidation and the devaluation of several East European currencies. As a result, profit before tax fell slightly below the comparable prior year level. After the deduction of income taxes at 28% (prior year: 19%), net profit for the period before minority interests totaled € 56.0 million (first three quarters of 2005|06: € 63.6 million).
60% of the investments in tangible assets during the first three quarters of 2006|07 were made in the Starch Segment. The main projects involved the construction of the bioethanol plant in Pischelsdorf/Lower Austria, the expansion of starch and bioethanol production in Hungary and the previously completed increase in capacity at the corn starch plant in Aschach/Upper Austria.
Revenues in the Sugar Segment rose by 8% to € 652.8 million for the first three quarters of 2006|07, compared to € 606.7 million in the first three quarters of 2005|06. Sales volumes of sugar in Austria increased by 4%, and price adjustments were implemented in the industrial sector in autumn 2006 to offset higher energy costs. The segment expanded its market positions in Hungary, the Czech Republic, Slovakia and Romania. Segment operating profit declined to € 38.2 million for the first three quarters of 2006|07 (first three quarters of 2005|06: € 41.0 million) as a result of the new EU sugar CMO and significantly higher energy costs.
Revenues in the Starch Segment rose by 7% over the comparable prior year figure of € 173.7 million to € 186.1 million for the first three quarters of 2006|07. Sales volumes increased 7% to 500,000 tons. The higher energy and grain costs led to a general increase in starch prices.
The change in operating conditions that resulted from the new sugar CMO triggered a decrease in prices and sales volumes for isoglucose from the production facility in Hungary. The weak Hungarian Forint also had an unfavorable impact on revenues during the reporting period. These developments as well as higher energy prices and an increase in the purchase price of corn resulted in a decline in segment operating profit to € 22.4 million in the first three quarters of 2006|07 (first three quarters of 2005|06: € 25.5 million).
During the first nine months of the calendar year (January 1 to September 30, 2006) revenues in the Fruit Segment rose to € 583.6 million (first three quarters of 2005|06: € 374.4 million) and operating profit increased to € 29.1 million (first three quarters of 2005|06: € 17.0 million). In comparison to the previous financial year, the former Atys Group and DSF (Deutsch-Schweizerische Früchteverarbeitung GmbH) are fully consolidated for the entire first nine months of 2006|07.
“Price increases that took effect in the Fruit and Starch Segments during the third quarter of 2006|07 will lead to a higher-than-expected improvement in revenues for the reporting year“, explained CFO Walter Grausam. Group revenues are now forecasted to rise by roughly 25% from € 1.5 billion in 2005|06 to nearly € 1.9 billion for 2006|07.
This development will be supported above all by organic growth in the Starch and Fruit Segments, as well as the adjustment of the financial year for the companies in the Fruit Segment and subsequent inclusion of two additional months. Furthermore, Group revenues will reflect the first full-year consolidation of the former Atys Group and initial consolidation of DSF. The Fruit Segment will generate the largest share of revenues during the current financial year.
In the Sugar Segment, the flexible quota reduction and a decline in exports as of July 2006 as well as higher energy costs and first payments to the restructuring fund will have an unfavorable impact on earnings. However, these external factors will be partly offset by rationalization and cost savings measures implemented during the previous year and lower purchase prices for beets.
Sales volumes in the Starch Segment are forecasted to rise by roughly 8% in 2006|07. However, segment operating profit is not expected to match the prior year level because of lower prices for isoglucose and a significant increase in raw material and energy costs.
The Fruit Segment is expected to generate the largest share of operating profit, and will more than offset the negative impact of the new sugar CMO on results. This underscores the appropriateness of the diversification and growth strategy pursued by AGRANA. In total, the Group will be able to match the good operating profit recorded in the previous year (before restructuring).
